Accounting for French Law Firms: BNC, SELARL, CARPA and VAT

French law firm accounting has its own logic. A law firm may invoice legal fees, receive advances, handle client monies through CARPA, recharge costs, manage work in progress and choose between individual BNC taxation and a corporate SELARL structure. The finance question is not only how much cash came in. It is whether that cash belongs to the firm, to the client or to a third party.

This guide is written for French lawyers, international firms operating in France and partners considering a move from BNC practice to a SELARL. It complements our pages on accounting for lawyers in France, VAT for lawyers, SELARL and BNC reform and French accounting services in Paris.

French law firm accounting has three layers: operating accounting, client money control and legal-structure planning. Operating accounting covers fees, costs, VAT, profit and cash. Client money control covers CARPA, matter-level documentation and traceability. Structure planning covers BNC, SELARL, partner pay, potential SPFPL arrangements and succession.

Freshness note: updated on 3 May 2026. Bar rules, tax guidance and social security treatment must be checked at the transaction date, especially for French professional companies and e-invoicing.

BNC practice is often suitable for a solo lawyer or a small practice with simple operations. It keeps the tax logic close to professional income, cash receipts, expenses, social contributions and the annual 2035 return.

A SELARL is different. It can help structure a growing firm, admit partners, prepare a transfer, separate operating cash and formalise remuneration. But it also introduces company accounts, corporate filings, governance documents and a more detailed distinction between professional activity, management duties and capital income.

Our accounting view: the right question is not which option pays the least tax in isolation. The right question is which format gives the partners enough legal, tax and financial clarity for the way the firm will actually grow.

Client monies handled by lawyers should not be confused with firm revenue. CARPA provides a regulated framework for handling client funds, but the accounting file still needs a clear trail by matter. Each amount should be linked to a client, engagement, instruction, invoice or refund.

The minimum evidence trail includes:

• engagement letter and fee agreement;
• request for funds or advance;
• CARPA movement or supporting evidence;
• matter allocation;
• fee invoice when the amount becomes firm income;
• repayment or transfer where relevant.

The underestimated risk is operational. If client monies, advances, disbursements and fees are managed in the same mental bucket, the annual accounts become hard to defend even where the legal work itself is properly documented.

Legal fees are generally within the scope of French VAT, subject to specific exceptions and the possible small-business VAT exemption when its conditions are met. Disbursements and recharged expenses require a separate analysis; a reimbursed cost is not automatically outside the VAT base.

For more detail, see our article on VAT for lawyers and our French tax advisory service.

Under BNC real regime, the 2035 return requires reliable tracking of revenue, professional expenses, mixed-use costs, fixed assets and contributions. Under a SELARL subject to corporate tax, the firm moves to full company accounts with balance sheet, profit and loss account, notes and corporate tax package.

The close should cover:

• billed but unpaid fees where accrual accounting applies;
• client advances that are not yet earned income;
• work in progress and unbilled time;
• doubtful receivables;
• mixed professional and personal expenses;
• legal databases, software, equipment and subscriptions.

The French 2035 return guide provides further context for liberal professions.

French tax guidance on professional companies makes the analysis of partner remuneration important. A payment may relate to technical legal work, management duties or invested capital. The tax and social treatment can differ.

1. Define a written remuneration policy.
2. Separate technical legal work from corporate management.
3. Document flows between the SELARL, partners and any holding structure.
4. Avoid distributions without social and tax review.
5. Update internal agreements when a partner joins or leaves.

VATable firms are affected by the French e-invoicing reform according to the national timetable. The issue is not only invoice issuance. Supplier invoice receipt, archiving, audit trail, bank matching and internal approval workflows must also be ready.

A tool such as Pennylane, configured with matter-level analytics, can support:

• billed and collected fees;
• client balances;
• recharged costs;
• output and input VAT;
• available cash;
• profitability by partner or practice area.

Hayot Expertise treats law firm accounting as a flow-separation discipline. Client money is not firm income, advances are not always earned revenue, and a SELARL does not solve governance issues by itself. Partners need usable monthly information before the year-end close: WIP, collections, social cost, VAT and net cash.

The biggest risk is not one isolated bookkeeping entry. It is the absence of a reliable bridge between the legal file, the accounting file and the bank trail. Each amount should be explainable by client, matter, invoice, mandate, bank account and tax treatment.

• Check current French tax guidance on professional companies.
• Prepare e-invoice receipt where the firm is VATable.
• Review documentation for disbursements and recharged costs.
• Reconcile CARPA movements with invoices and matter records.
• Avoid creating content that competes with the existing lawyer sector page.